The decision of Dunhill -v- Burgin (12.3.14) now establishes the correct approach to the question of whether a person has capacity to conduct proceedings for the purposes of the relevant Civil Procedure Rules (CPR rule 21).
Surprisingly, this was not entirely clear on the basis of earlier authorities.
The Supreme Court has ruled that the question of capacity must be assessed in the context of the claim which the claimant in fact has, and not by reference to the claimant’s capacity to conduct the claim as formulated by his or her lawyers. This broader approach provides a greater degree of protection to persons lacking capacity (children and patients) and is consistent with the policy objectives of the rules relating to those parties that need the protection of the court.
The general position under English law is that a contract made by a person who lacks capacity is valid unless the other party knew, or ought to have known, about the incapacity. This decision confirms that the settlement of a claim is an established exception to this rule. In reaching this conclusion, the court held that CPR 21.10 is not ultra vires, and carves out a “substantial but quite specific exception” to the common law rule.